4. Summary of Potential Benefits and Risks of Deregulation
It is not possible to definitively prove the case for or against statutory single-buyer powers for agricultural and horticultural produce on currently available evidence. However, this paper has reviewed the significant costs imposed by the current structure, and the evidence suggests that the sole potential benefit (market power overseas) is both too uncertain and too small to offset those costs.
In particular the estimated benefits of market power are partially or completely offset by the estimated costs generated by the bundling of returns into a single product price.
This is without considering the other negative effects relating to lack of cost pressures, reduced flexibility and innovation, and lack of risk diversification. The medium term benefits from eliminating these effects are likely to provide the greatest gains from deregulation.
It has been suggested that “value” will be destroyed by deregulation. This analysis indicates that it is doubtful whether such “value” actually exists and even if it does, its loss is likely to be more than offset by the potential for new value creation in an open environment.
